We recently published a list of 10 Most Profitable Value Stocks to Buy Now. In this article, we are going to take a look at where Pfizer Inc. (NYSE:PFE) stands against other profitable value stocks to buy now.
Matt Powers, Managing Partner at Powers Advisory Group, joined the discussion on CNBC’s ‘Power Lunch’ on March 11 to provide insights into the shift from growth to value investing and the resurgence of traditional dividend strategies. Powers emphasized that this transition has become increasingly evident, particularly following last week’s market activity and the events of March 10. He noted that while the market behavior on March 11 might tell a slightly different story, the broader trend is unmistakable. For years, growth stocks dominated portfolios, but now investors are gravitating toward value and dividend investing, which had been largely overlooked for over a decade. Powers attributed this shift to various catalysts, which included tariffs and policy uncertainty from Washington and President Trump’s unpredictable stances. He described investors as exhausted, and welcomed the normalization of equity markets and a return to diversification and traditional investing.
Powers highlighted the importance of diversification, contrasting high-growth portfolios with those focused on dividends. He pointed out that ETFs have outperformed large-cap growth funds year-to-date, with a notable 11-point difference in returns. The dividend fund is up 5%, while the large-cap growth fund is down 6%. He explained that tech stocks dominate large-cap growth funds and account for nearly half of their portfolios. In contrast, dividend-focused funds are more diversified across sectors such as healthcare, financials, and staples. This diversification reduces concentration risk and provides defensive characteristics in an uncertain market environment. Powers elaborated on the leadership shift between these two types of funds. While growth ETFs feature holdings like the MAG7, dividend ETFs focus on blue-chip companies. A year ago, growth stocks were investor favorites, but now value stocks are taking the lead, which is a trend reflected in their performance. He stressed the importance of broadening diversification within portfolios and not ignoring value opportunities.
Methodology
We sifted through the Finviz stock screener to compile a list of the top stocks with a forward P/E ratio under 15. We then selected the 10 stocks with a TTM net income greater than $1 billion and that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q4 2024.
Note: All data was recorded on March 13.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A healthcare professional in a meeting with a patient discussing care options using digital technology.
Pfizer Inc. (NYSE:PFE)
TTM Net Income as of March 13: $8.031 billion
Forward P/E Ratio as of March 13: 8.66
Number of Hedge Fund Holders: 92
Pfizer Inc. (NYSE:PFE) is a biopharmaceutical company that discovers, develops, and markets a range of medicines and vaccines. From cardiovascular and infectious disease treatments to oncology and rare disease therapies, it serves diverse patient needs through a robust portfolio and strategic collaborations.
The company’s oncology division is strengthened by the recent Seagen acquisition, which brought Pfizer Inc. (NYSE:PFE) a portfolio of antibody-drug conjugates (ADCs) and strengthened its oncology pipeline. The company’s Padcev medication, combined with pembrolizumab, is a cancer treatment regimen. It’s the leading first-line treatment for advanced bladder cancer in the US. Potential trial data for this treatment in 2025 could triple the patient population addressed.
The company is actively running Phase 3 trials for atirmociclib in breast cancer, sigvotatug vedotin in lung cancer, and candida in head and neck and lung cancers. These trials aim to expand treatment options and address unmet medical needs. Pfizer Inc. (NYSE:PFE) expects multiple Phase 3 readouts in 2025, which, if successful, could lead to new approvals and further growth.
Parnassus Value Equity Fund bought Pfizer Inc. (NYSE:PFE) as the fund anticipated growth from the Seagen acquisition. It stated the following in its first quarter 2024 investor letter:
“During the quarter, we added new positions in Pfizer Inc. (NYSE:PFE), NICE and Charter Communications. We purchased Pfizer to capture the potential upside from any turnaround following the COVID-induced boom-bust cycle of the last few years. Pfizer’s stock price sank by more than 40% in 2023 as COVID-19 vaccine revenues rolled off, providing an attractive entry point for us. The company completed its acquisition of Seagen, which should strengthen Pfizer’s pipeline in antibody-drug conjugates (ADC). Pfizer also offers an attractive dividend yield.”
Overall, PFE ranks 6th on our list of the most profitable value stocks to buy now. While we acknowledge the growth potential of PFE as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PFE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.